Why charity should use an investing model

Commentary: Disaster relief doesn’t solve underlying problems

By

ThomasKostigen

SANTA MONICA, Calif. (MarketWatch) — The charity model used to do good in the world fails. Instead, a new model based on investing needs to be embraced if goals are to be met, missions completed, people saved.

As the famine crisis looms in the Horn of Africa, natural disasters strike around the planet, and more people are pushed into harm’s way, it’s time to rethink the way we conduct charitable giving.

Long-term stakeholders with vested interests in seeing things through must be built. Investing ensures people are committed and linked to projects and causes. Charity is too momentary.

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Take the situation in Haiti. In a terrific feature Rolling Stone feature story this month outlining the ongoing strife there, a full 18 months after the devastating earthquake effectively destroyed much of the country, Janet Reitman writes about “how the world failed Haiti.” Read the Rolling Stone story: “How the World Failed Haiti.”

She writes, “In the immediate aftermath of the earthquake on January 12th, 2010, the international community resolved not only to rebuild Haiti, but also to establish new and more efficient models for dispensing humanitarian aid. President Obama, calling the tragedy ‘cruel and incomprehensible,’ pledged ‘every element of our national capacity’ to the response. Former Presidents George W. Bush and Bill Clinton created a special fund for Haiti; the American Red Cross launched a wildly successful appeal, raising close to $500 million in one year. In total, an estimated one in two American households donated more than $1.4 billion to Haiti relief, with close to $11 billion more for reconstruction pledged by donor countries and financial institutions. ‘We will be here today, tomorrow and for the time ahead,’ Secretary of State Hillary Clinton promised during a post-quake visit to Port-au-Prince….But despite all that has been promised, almost nothing has been built back in Haiti, better or otherwise.”

Reuters

The destruction of the January 2010 earthquake didn’t spare the presidential palace in Port-au-Prince. Despite massive charitable giving, very little has been rebuilt in Haiti.

Some startling statistics accompany the piece about Haiti: 3 million people languish in permanent misery; only $184 million of the $1.14 billion allocated by Congress has been “obligated”; The American Red Cross spent only $245 million of the $479 million it raised by the one-year anniversary of the tragedy; among more disheartening figures and analysis.

To be sure, when disaster strikes and immediate care is needed, it may be difficult to contemplate an investment opportunity that suits the situation. And of course crisis dollars must flow. But crisis dollars don’t account for the lion’s share of philanthropy. Even all the money pledged to Haiti, or the $10 billion that was reportedly pledged by the international community to the tsunami that swept through the Indian Ocean in 2004 pales in comparison to the more than $290 billion that donors gave in total to various causes in the U.S. alone last year, according to the annual report put out by the Giving USA Foundation and the Center on Philanthropy at Indiana University.

Listen, I have been there on the ground up close and personal with people who are suffering and dying. They reach out, implore and even beg for your assistance. Unless you are emotionless you, of course, do what you can to help. Still, the relief is temporary and the problem persists. A grander campaign needs to begin. And it needs to begin by investing not giving.

I am not suggesting that we profit off disaster; returns can come in all sorts of ways. I am suggesting that we contemplate the way we give, which is to say that we shouldn’t think of it as giving at all.

Investing suggests an expected return. And there has been too little return when it comes to relief efforts.

It’s time people received good returns on all the money that’s given to do good.

Charitable giving funds are investment vehicles that work this way, as are funds with social missions. How about we start with them reaching out in times of disaster instead of those organizations that always seem to have their hand out — but are doing little to give back.

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